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person (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million;

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person acting solely on behalf of any such institutional investor.

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Liquidity: The value lies beneath

A new ETF with low average daily trading volume may not mean it lacks liquidity.

When it comes to reading and interpreting an ETF’s true liquidity, it’s vital that investors look below the surface. So while some pundits suggest that new ETFs always carry elevated risks based solely on their lower average daily trading volume, that’s simply not true. There can be newly issued ETFs with deep liquidity, much of it unseen on a trading screen.

Average daily volume ≠ liquidity

Average daily volume (shares traded on an exchange) is not
the ultimate representation of an ETF’s liquidity. Rather, it’s
related to the liquidity of the underlying basket of securities.
Thus, just because an ETF has low average daily volume does
not mean that it’s difficult to trade.
Remember, significant ETF trading activity may be taking
place off exchanges altogether. Unlike an individual stock,
the number of outstanding ETF shares can change based
on supply and demand. Authorized Participants (APs)¹
facilitate this process by working directly with ETF issuers
and market participants. The ability of ETF shares to fluctuate
with supply and demand helps keep bid-ask spreads²
narrow. Knowing that an ETF sponsor has a successful
track record launching new products is more important
than average daily volume.

Large trades ≠ large problem

Liquidity is not solely based on the volume of ETF shares
traded. Rather, it’s based on the liquidity of the underlying
securities that are held by the ETF. That said, it’s important
to follow best practices when trading. If investors use their
trading desks for large trades they may get more efficient pricing because trading desks have access to multiple
layers of liquidity, including the trading that takes place
over-the-counter (off exchange).

Thus, the perception that it’s too risky to buy newly issued
ETF may be naive. Of course due diligence is required for
any ETF to understand who stands behind the investment
and whether the sponsor has the experience and relationships
to provide adequate liquidity.

Trading Tips

1. Size matters: If you endeavor to make a large buy or
sale of ETF shares, it’s best to call your trading desk
directly. Trading desks have direct access to APs and market
makers who may provide better pricing on large block
trades. In fact, using your trading desk is good advice if you
ever have questions regarding a transaction.

2. Time is money: ETF spreads have tended to be wider
immediately after the open because underlying stock
spreads typically have been wider at this time. Under normal
market conditions, ETF spreads have tightened after
the first 30 minutes of trading.

3. Know your limits: Market orders execute immediately
in the secondary market and should primarily be used
for small trades, because they only access onscreen liquidity.
Limit orders³ may limit risk because investors can specify a
minimum or maximum price. This allows for more onscreen
liquidity to become available before moving the price.

More than meets the eye

It’s likely there may be more ETF liquidity than is evidenced by average trading volumes.

1. Authorized participant: Liquidity providers, typically large financial institutions with
ample resources, who are exclusively authorized to increase or decrease the supply
of available ETF shares to help meet changing demand.

2. Bid-ask spread: The difference between the immediate cost quoted to buy and sell
shares of a specific security.

3. Limit order: An order to buy or sell a security at a specified price or better.

There are no assurances that an active trading market for ETF shares will develop or be maintained. A liquid market
may not continuously exist for any ETF. ETFs trade intraday (daily and continuous) on major stock exchanges and
the share price fluctuates the same as any stock. Expenses, trading fees, and commissions may apply.

An investor should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about the Fund can be found in the Fund’s prospectus, or, if applicable, the summary prospectus. To obtain a copy, please visit www.victorysharesliterature.com, call your Financial Advisor, or call shareholder services at 866.376.7890. Read the prospectus carefully before investing.

Investing involves risk, including the potential loss of principal. There is no guarantee that dividends will be paid. The value of the equity securities in which the Fund invests may decline in response to developments affecting individual companies and/or general economic conditions.

You may lose money by investing in the Fund. There is no guarantee that the Fund will achieve its objective. The Fund has the same risks as the underlying securities traded on the exchange throughout the day.

Indexes are unmanaged and it is not possible to invest directly in an index.

VictoryShares ETFs are distributed by Foreside Fund Services, LLC. Victory Capital Management Inc. is the adviser to the VictoryShares ETFs. Victory Capital is not affiliated with Foreside Fund Services, LLC.

NOT A DEPOSIT • NOT FDIC OR NCUA INSURED • MAY LOSE VALUE • NO BANK OR CREDIT UNION GUARANTEE